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Owner Indicted in Kickbacks, Laundering

Friday, February 8, 2013

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A New York City construction firm owner has been indicted on charges that he squeezed more than $100,000 in kickbacks from his employees, then laundered the proceeds.

Leonid Fridman faces multiple felony counts of grand larceny and money laundering for allegedly failing to pay legally required wages to his workers on a Port Authority of New York and New Jersey construction project and concealing $100,000 he stole in an account he created for a Florida corporation, New York Attorney General Eric T. Schneiderman announced Monday (Feb. 4).

Fridman has been arraigned before Queens Criminal Court Judge Donna-Marie E. Golia on Friday. Bail was set at $5,000.

Covering His Tracks

“Mr. Fridman not only stole state dollars from his own workers, but he demanded kickbacks and laundered money to cover his tracks,” Schneiderman said. “My office will continue to take action, including filing criminal charges, against employers who violate New York’s labor laws, steal taxpayer dollars, and violate the public trust.”

Jet Blue - JFK Airport
Wikimedia Commons

Millennium Commercial Corp. was contracted to build JetBlue's Terminal 5 at JFK Airport in 2010.

Fridman, 60, owned and operated Millennium Commercial Corp., a Brooklyn-based company that performed tile work, authorities said.

The company performed tile restoration work as a subcontractor on the renovation of the TWA Flight Center at John F. Kennedy Airport in 2009 and 2010.

Fridman could not be reached for comment.

Pay Reports and Kickbacks

Under the Port Authority contract for the project and the Labor Law, Fridman was required to pay his employees more than $50 per hour for laborers and mason tenders and more than $70 per hour for tile setters. According to court records, Fridman knew that he was required to pay prevailing wages, but still paid his workers only $10 to $30 per hour.

To avoid detection, Fridman filed false certified payroll reports that showed he had paid the appropriate wages and issued paychecks in the proper amounts, authorities said.

Attorney General Eric T. Schneiderman

Leonid Fridman stole state dollars from his own workers, then "demanded kickbacks and laundered money to cover his tracks," said Attorney General Eric T. Schneiderman.

But he then "made his workers cash the checks at his bank and kick back, or return, a majority of the cash to him" and "hid over $100,000 of the money he stole by moving it into the account of a Florida corporation he controlled, Green Investments Inc.," the attorney general said.

Potential Prison Terms

Fridman faces one count each of second-degree grand larceny and second-degree money laundering. Both are class "C" felonies punishable by up to five to 15 years behind bars. He also faces a class "D" felony, violation of labor law, and 52 counts each of first-degree falsification of business records and first-degree offering a false instrument for filing, class "E" felonies.

New York's prevailing wage law seeks to ensure that government contractors pay wages that are comparable to the local norms for a given trade. The law requires an hourly rate for construction work performed for public agencies that is well above the state minimum wage of $7.25 per hour, along with benefits, as well as higher wages for overtime, weekends or work at night.

"Companies doing business with municipalities, state agencies and authorities are legally bound to pay their employees the fair and prevailing wage," said Robert E. Van Etten, Inspector General for the Port Authority of NY and NJ.

"In this case, the defendant chose to enrich himself at the expense of his own workers by creating an elaborate fraud to conceal and disguise the nature, location, source, ownership and control of the funds.

"This arrest will serve notice to all contractors that the Port Authority of NY & NJ will not tolerate wage fraud or any other criminal misconduct on public projects. The Port Authority Office of the Inspector General and its Law Enforcement partners will aggressively identify, investigate and bring to justice those who corrupt the integrity of the construction industry.”

   

Tagged categories: Airports; Construction; Enforcement; Labor; Laws and litigation; Subcontractors

Comment from Richard Hogue, (2/8/2013, 8:21 AM)

Isn't this business as usual in NY?


Comment from Donald L Crusan, (2/11/2013, 10:06 AM)

Russian Mafia? With the ties that go along with it.


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